Sunday, May 04, 2008

This morning, George Stephanopoulos began his televised interview with Senator Hillary Rodham Clinton by asking if she could name a single economist who supported her plan for a gas-tax suspension.

Mrs. Clinton did not. “I’m not going to put in my lot with economists,” she said on the ABC program “This Week.” A few moments later, she added, “Elite opinion is always on the side of doing things that really disadvantages the vast majority of Americans.”

Look. This isn't hard. The supply of gas over the summer is basically fixed; refineries are running flat out, and can't quickly add capacity. Retailers won't respond to more demand by selling more gas --- because they can't. So, what does happen? They keep raising the price of the stuff they have until they can no longer sell it all. So, for lack of any other rationing system, the free market effectively rations the stuff by willingness to pay. And, as Paul Krugman explains:

... if the supply of a good is more or less unresponsive to the price, the price to consumers will always rise until the quantity demanded falls to match the quantity supplied. [Emphasis added.] Cut taxes, and all that happens is that the pretax price rises by the same amount.

The plan won't save ordinary folks a dime. And some of them aren't fooled:

Stephanopoulos turned the mike over to a woman who said she supported Obama and said she makes less than $25,000 a year.

"I do feel pandered to when you talk about suspending the gas tax," the woman said, adding: "Call me crazy but I actually listen to economists because I think they know what they've studied."

So, what of Hillary herself? She's touting a plan that's nonsense the way Dubya's war plans were nonsense; the reasons it can't work are widely acknowledged facts which aren't seriously disputed by anyone with relevant knowledge.

Perhaps, after days of publicly touting this proposal, she still doesn't know she's selling snake oil. Or maybe she knows, but doesn't care. But either way, in now flatly rejecting the very notion of expert advice (to the astonishment of some experts who thought they were advising her), she has left the reality based community.

Note: last paragraph edited late; the point was getting lost. Also, I'm a bit uncomfortable with the argument here because there are points --- like so-called "Washington consensus" policy on the economic management of developing countries, where there is at least a rough consensus among economists that I'd dispute. But in those cases, you can find prominent experts, like Joseph Stiglitz, who dispute the consensus. This is confusion of a different order. She's just getting simple sums wrong, and blowing smoke when called on it.